Mining royalties earned by Quebec government soared to $304 million last year

CP

MONTREAL - Quebec earned $304 million in mining royalties last year, more than the $289 million collected in the 10 previous years combined.

The royalties were more than double the $133 million forecast in last March's budget by provincial Finance Minister Raymond Bachand.

The dramatic increase was partially due to recent changes in the government royalty regime. Higher volumes of material extracted and rising prices accounted for the other 50 per cent of the increase.

In March 2010, the mineral royalties increased to 14 per cent from 12 per cent. It rose to 15 per cent in January and is slated to reach 16 per cent in early 2012.

Quebec forecasts that mining royalties will total $365 million on average during each of the next four years, for a total of $1.4 billion.

It's five times more than the $327 million that would have been collected if the royalty rates were not changed.

Quebec is one of the 10 largest producers in the world in the mining sector. The province is the second-largest producer of gold and iron in Canada and a major supplier of specialty metals such as niobium, industrial minerals and construction materials.

Quebec has about 30 mines operating, producing everything from gold, iron and titanium to asbestos, copper, zinc, and silver.

The government estimates that the total tax impact to the province and municipalities of the mining sector exceeded $ 600 million in 2010 and will represent more than $4 billion by 2014.